Q4 2023 1-800-FLOWERS.COM Inc Earnings Call

Speaker 1: Excuse me, this is a conference operator. Thank you for your patience. The call will begin shortly. Please continue to hold. Thank you.

Excuse me. This is the conference operator, thank you for your patience on the call will begin shortly please continue to hold thank you.

[music].

Speaker 2: For.

Speaker 2: The.

Speaker 1: Good morning and welcome to the 1-800-Flowers.com fiscal 2023-2023.

Good morning, and welcome to the one 800 flowers dotcom fiscal 'twenty to 'twenty, three fourth quarter and year end earnings call. All participants will be in listen only mode should you need assistance. Please signal a conference special.

Speaker 1: fourth quarter and year-end earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch tone phone. To withdraw your question, please press star then two.

It was by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question. You May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please.

Speaker 1: Please note this event is being recorded. I would now like to turn the conference over to Andy Milavoy, Senior Vice President, Invest Relations.

Please note. This event is being recorded I would now like to turn the conference over to Andy Miller, Hawaii, Senior Vice President Investor Relations.

Please go ahead.

Speaker 3: Good morning and welcome to our fiscal 2023 fourth quarter and year end earnings call.

Good morning, and welcome to our fiscal 2023 fourth quarter and year end earnings call.

Speaker 3: Joining us today are Jim McKen, Chairman and CEO , Tom Hartnett, President, and Bill Shea, CFO .

Joining us today are Jim Mccann, Chairman and CEO , Tom Hartnett, President and Bill Shea CFO .

Speaker 3: Before we begin, I'd like to remind you that some of the statements we make on today's call are covered by the Safe Harbor disclaimer contained in our press release and public documents.

Before we begin I'd like to remind you that some of the statements. We make on today's call are covered by the safe Harbor disclaimer contained in our press release and public documents.

Speaker 3: During this call, we will make forward-looking statements with predictions, projections, and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission.

During this call we will make forward looking statements with predictions projections and other.

Other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission.

Speaker 3: The company disclaims any obligation to update any of the forward looking statements that may be made or discussed during this call.

The company disclaims any obligation to update any of the forward looking statements that may be made or discussed during this call.

Speaker 3: Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAP.

Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAAP.

Speaker 3: Reconciliation of these non-GAT financial measures to the most directly comparable GAT measures can be found in the tables of our earnings release. And now I'll turn the call over to Jim.

<unk> of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in the tables of our earnings release.

And now I'll turn the call over to Jim.

Thanks, Andy and good morning, everyone.

Speaker 4: It's great to be with you today. Many of you know me and for some of you who I don't know, I look forward to getting to know you as well.

It's great to be with you today. Many of you know me and for some of you I don't know I look forward to getting to know you as well.

Speaker 4: Since our last earning school, we announced that my brother Chris was stepping down as CEO for personal health reasons.

Since our last earnings call, we announced that my brother, Chris was stepping down as CEO of a personal health reasons I wanted to take this opportunity to thank Chris for all of his contributions to our company over the many years that he and I have worked together Chris.

Speaker 4: I wanted to take this opportunity to thank Chris for all of his contributions to our company over the many years that he and I have worked together. Chris played an integral role in overseeing our rapid growth and enhancing our market leading position of the company.

Chris played an integral role in overseeing our rapid growth and enhancing our market leading position of the company.

Speaker 4: You always look beyond the shoreline to see what's next, where the consumer is going, and, in short, we always embraced the coming waves of technology.

You always look beyond the short line to see what's next where the consumer was going and ensured we always embraced the coming waves of technology.

Speaker 4: whether it was expanding our business from a 1-800-Flowers phone number to the internet, to mobile commerce, to social commerce, and now the AI technologies. Chris made sure we were ahead of the curve.

Either it was expanding our business from a one 800 flowers phone number to the internet to mobile commerce to <unk>.

Commerce and now the AI technologies, Chris made sure. We were ahead of the curve.

Speaker 4: We as a company have a rich history of innovation and embracing new technology and will continue to play a vital role in solving the relationship needs of millions of customers.

We as a company have a rich history of innovation and embracing new technology.

Operator: Excuse me, this is a comfort operator. Thank you for your patience. The call will begin shortly. Please continue to hold. Thank you.

And we will continue to play a vital role in solving the relationship needs of millions of customers.

Speaker 4: We're grateful that Chris, who was currently taking a leave of absence, remains on our board of directors. And after his leave of absence ends, we expect him to return in a new capacity to help us navigate the coming waves of innovation.

We're grateful that Chris will who is currently taking a leave of absence remains on our board of directors and after his leave of absence ends we expect them to return around new capacity to help us navigate the coming waves of innovation.

Speaker 4: I want to take this opportunity to highlight the depth of our talent bench and the role that Tom Hautnett has played in our organization.

I'll I'll take this opportunity to highlight the depth of our talent bench and the role that Tom Hartnett has played in our organization.

Speaker 4: Tom, who many of you know, has been with us for over 30 years and was promoted to president of the company just last year.

Tom who many of you know has been with US for over 30 years and was promoted to president of the company just last year.

Speaker 4: Thomas played a critical role in overseeing the successful execution of our strategic initiatives and leads our talented management team as we collectively continue to execute our strategy to be a top destination for our customers' celebratory and gifting.

Tom has played a critical role in overseeing the successful execution of our strategic initiatives and leads our talented management team as we collectively continue to execute our strategy to be a top destination for our customers' celebratory and gifting needs.

Speaker 4: In a moment I'll turn the call over to Tom, who will provide a business update. But before I do that, let's take a moment to look at where we've been and where we are and where we're going.

Moment, I will turn the call over to Tom who will provide a business update but before I do that let's take a moment to look at where we've been and where we are and where we're going.

Speaker 4: Over the past couple of years, we, along with many companies, faced numerous challenges beginning with operating a business during the pandemic, then significant disruptions in the global supply chain and labor shortages, followed by inflationary pressures and meaningful change in consumer behavior.

Over the past couple of years, we along with many companies faced numerous challenges beginning with with operating the business during the pandemic than significant disruptions in the global supply chain and labor shortages, followed by inflationary pricing and meaningful change in consumer behavior.

Speaker 4: This significantly affected many aspects of our business, but in particular our gross profit margin and profitability.

It's significantly affected many aspects of our business, but in particular, our gross profit margin and profitability.

Speaker 4: Over the past fiscal year, we saw an improving macro environment on several fronts, including ocean freight rates that have approached their pre-pandemic levels and certain commodity costs that have come off their highs. These macro forces come...

Over the past fiscal year, we saw an improving macro environment on several fronts, including ocean freight rates that have approached their pre pandemic levels in certain commodity costs that have come off their highs.

These macro forces combined with our own efforts to.

Speaker 4: to increase efficiencies, including our automation investments and logistics optimization efforts led to the margin improvement we began to experience in fiscal 23.

To increase efficiencies, including our automation investments and logistics optimization efforts led to the margin improvement we began to experience in fiscal 'twenty three.

Speaker 4: As the pendulum continues to swing back in fiscal 24, we expect to continue to benefit from the lower ocean freight course, commodity course, that continue to revert closer to the mean, and our efforts to improve efficiency.

As the pendulum continues to swing back in fiscal 'twenty four we expect to continue to benefit from the lower ocean freight costs commodity costs that continue to revert closer to the mean and our efforts to improve efficiencies.

Operator: Good morning and welcome to the 1-800-Flowers.com fiscal 2023, 4th quarter and year end earnings call. All participants will be in listen only mode. Should you need assistance, please signally conference specialist by pressing the star key followed by zero.

Speaker 4: As we look a little further down the road, say the next year 2 or 3, we expect our gross margin to continue to benefit from these factors and return to its historical 10-year average of approximately 42%, which we experienced prior to fiscal 22. This is sort of a story of a...

As we look a little further down the road say the next year or two or three we expect our gross margin to continue to benefit from these factors.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star than one on your touch tone phone. To withdraw your question, please press star than two. Please note this event is being recorded.

And returned to its historical 10 year average of approximately <unk> <unk>.

42%, which we experienced prior to fiscal 'twenty two.

This is sort of a story of a reversion to the mi.

While it is very difficult to predict precisely when we will see more favorable environment for consumer discretionary spend we believe that with regard to revenue growth and margin recovery. It's a question of when not if.

Andy Milavoy: I would now like to turn the conference over to Andy Milavoy, Senior Vice President and Vest Relations. Please go ahead.

Jim McCann: Good morning and welcome to our fiscal 2023, 4th quarter and year end earnings call. Joining us today are Jim McCann, Chairman and CEO, Tom Hartnett, President and Bill Shea, CFO. Before we begin, I'd like to remind you that some of the statements we make on today's call are covered by the safe harbor disclaimer contained in our press release and public documents.

Speaker 4: The actions we have taken to enhance the customer experience, improve margins and optimize expenses combined with an improved consumer environment will enable us to achieve our historical sales growth, growth profit margin and epitome margin rate.

The actions, we have taken to enhance the customer experience improve margins and optimize expenses combined with an improved consumer environment will enable us to achieve our historical sales growth gross profit margin and EBITA margin rates.

Speaker 4: For these reasons, we remain very optimistic about our prospects and are confident that we are positioned well to perform and grow our company while building shareholder value.

For these reasons, we remain very optimistic about our prospects and are confident that we are positioned well to perform and grow our company while building shareholder value.

Jim McCann: During this call, we will make forward-looking statements with predictions, projections and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties, including those contained in our press release and public filings with the Securities and Exchange Commission. The company describes any obligation to update any of the forward-looking statements that may be made or discussed during this call.

Speaker 4: I'll now turn the call over to Tom for an update on the business.

I'll now turn the call over to Tom for an update on the business.

Speaker 1: Thanks, Jim, and good morning, everyone. Our fourth quarter adjusted IPDOT improved over $10 million from the prior year as we continue to successfully navigate an ever-changing and complex consumer environment.

Thanks, Jim and good morning, everyone.

Our fourth quarter, adjusted EBITDA improved over $10 million for the prior from the prior year as we continue to successfully navigate an ever changing and complex consumer environment.

Speaker 1: We entered fiscal 2023. We anticipated that consumers would be challenged by ongoing inflationary pressures.

Jim McCann: Additionally, we will discuss certain supplemental financial measures that were not prepared in accordance with GAT. Reconciliation of these non-GAT financial measures to the most directly comparable GAT measures can be found in the tables of our earnings release.

Fiscal 2023, we anticipated that consumers would be challenged by ongoing inflationary pressures, which was further exacerbated by rising interest rates and increasing fears of a recession.

Speaker 1: which was further exacerbated by rising interest rates and increasing fears about recession.

Speaker 1: As we move from the holiday period during our fiscal second quarter into the second half of our fiscal year, we saw consumers pull their purse strings even tighter, especially outside of the holiday gifting period.

As we move from the holiday period during our fiscal second quarter into the second half of our fiscal year, we saw consumers pulled their purse strings, even tighter, especially outside of the holiday gifting periods.

Jim McCann: And now, I'll turn the call over to Jim. Thanks, Andy, and good morning, everyone. It's great to be with you today.

Jim McCann: Many of you know me, and for some of you who I don't know, I look forward to getting to know you as well. Since our last earnings call, we announced that my brother, Chris, was stepping down as CEO for personal health reasons. I wanted to take this opportunity to thank Chris for all of his contributions to our company over the many years that he and I have worked together. Chris played an integral role in overseeing our rapid growth and enhancing our market-leading position of the company.

Speaker 1: As a result, our fourth quarter-cell declined 14.8% and on a full-year basis, they declined 7.9% excluding the impact of the 53rd week a year ago. However, we believe it's important to place this in the proper

As a result, our fourth quarter sales declined 14, 8% and on a full year basis, they declined seven 9%.

The impact of the 50 <unk> week a year ago.

However, we believe it is important to place this in the proper context.

Speaker 1: While sales declined 8% for the fiscal year, this was against the backdrop of an almost doubling trying line by the agency.

While sales declined 8% for the fiscal year. This was against the backdrop of an almost doubling of ourselves since fiscal 2019.

Jim McCann: He always looked beyond the shoreline to see what's next, where the consumer was going, and assured we always embraced the coming waves of technology. Whether it was expanding our business from a 1-800-Flowers phone number to the internet, to mobile commerce, to social commerce, and now the AI technologies. Chris made sure we were ahead of the curve. We as a company have a rich history of innovation, and embracing new technology, and will continue to play a vital role in solving the relationship needs of millions of customers.

Speaker 1: Despite the challenging macro environment, we're able to retain the majority of the revenues that we gained over the last-

Despite the challenging macro environment, we're able to retain the majority of the revenues that we gained over the last few years.

Speaker 1: In fiscal 2023, we had revenues of $2 billion, and over 11 million customers. That more than...

Fiscal 2023, we had revenues of $2 billion and over 11 million customers.

That's more than $25 million, yes.

Speaker 1: Simply put, we are a bigger, better, stronger company today than we were just a few years ago.

Simply put we are bigger better stronger company today than we were just a few years ago by.

Speaker 1: by focusing on the frequency and retention of our existing customer...

Jim McCann: We're grateful that Chris, who was currently taking a leave of absence, remains on our board of directors, and after his leave of absence ends, we expect him to return a new capacity to help us navigate the coming waves of innovation.

By focusing on the frequency and retention of our existing customer base sales from existing customers represented 70% of our revenue in fiscal 'twenty three.

Speaker 1: sales from existing customers represented 70% of our revenue in fiscal 2015.

Speaker 1: While we were focused on marketing efficiency in a softer consumer environment, we nonetheless added 4.8 million new customers during fiscal 2020.

While we were focused on marketing efficiency and a softer consumer environment. We nonetheless added $4 8 million new customers during fiscal 'twenty three.

Jim McCann: I want to take this opportunity to highlight the depth of our talent, bench, and the role that Tom Houghtonette has played in our organization. Tom, who many of you know, has been with us for over 30 years, and was promoted to President of the company just last year. Tom has played a critical role in overseeing the successful execution of our strategic initiatives, and leads our talented management team as we collectively continue to execute our strategy to be a top destination for our customers.

Speaker 1: As a consumer facing company, growing our customer base will always be important, but we see tremendous opportunity in increasing the lifetime value of our existing customer base by converting them into multi-brand customers.

As a consumer facing company growing our customer base will always be important, but we see tremendous opportunity, increasing and increasing the lifetime value of our existing customer base by converting them into multi brand customers.

Speaker 1: Multi brand customers currently represent approximately 13% of our customer base. You have the account for approximately 13% of our customer base.

Multi brand customers currently represents approximately 13% of our customer base.

Jim McCann: In a moment, I'll turn the call over to Tom, who will provide a business update, but before I do that, let's take a moment to look at where we've been, and where we are going. Over the past couple of years, we, along with many companies, face numerous challenges beginning with operating a business during the pandemic, then significant disruptions in the global supply chain and labor shortages, followed by inflationary pressures and meaningful change in consumer behavior.

Get the account for approximately 28% of our revenue.

Additionally, we have over $1 3 million celebrations passport members, who are on currencies there benefits across our family of brands.

Speaker 1: Additionally, we have over 1.3 million Celebrations passport members who are encouraged to use their benefits across our family.

Speaker 1: We've already implemented several initiatives to increase these metrics.

We've already implemented several initiatives to increase these metrics.

Speaker 1: This includes highlighting our family of brands across our websites and enhancing our search function to provide relevant gifting ideas from our portfolio of brands on a single results page.

This includes highlighting our family of brands across our websites and enhancing our search function to provide relevant gifting ideas from our portfolio of brands on a single results page.

Jim McCann: This significantly affected many aspects of our business, but in particular, our growth, profit margin, and profitability. Over the past fiscal year, we saw an improving macro environment on several fronts, including ocean freight rates that have approached their pre-pandemic levels, and certain commodity costs that have come off their highs. These macro forces combined with our own efforts to increase efficiencies, including our automation investments and logistics optimization efforts led to the margin improvement we began to experience at fiscal 23.

Speaker 1: And by leveraging our brand-agnostic warehouse to fill up facilities, we can offer unique bundles for customers to create a truly special one of a kind.

And by leveraging our brand agnostic warehouse facilities, we can offer unique bundles for customers to create a truly special one of a kind yes.

Speaker 1: Throughout Fiscal 23, we continue to see strong growth in our higher price point, cross-brand bundles as customers continue to gravitate towards these higher value offers.

Throughout fiscal 'twenty, three we continue to see strong growth in our higher price point <unk> brand bundles as customers continue to gravitate towards these higher value offerings.

Speaker 1: As a result, our AOV increased to approximately 6% for the year.

As a result, our <unk> increased approximately six 6% for the year.

Speaker 1: We will continue to expand our price points both lower and higher to provide gifting options for all our customers.

We will continue to expand our price points, both lower and higher to provide gifting options for all of our customers.

Jim McCann: As the pendulum continues to swing back in fiscal 24, we expect to continue to benefit from the lower ocean freight costs, commodity costs that continue to revert closer to the mean, and our efforts to improve efficiency. As we look a little further down the road, say the next year, two or three, we expect our gross margin to continue to benefit from these factors and return to its historical 10-year average of approximately 42%, which we experienced prior to physical 22.

This includes providing free digital products to help our customers stay connected with the important people in their lives.

Speaker 1: This includes providing free digital products to help our customers stay connected with the important people in their lives.

Speaker 1: Great examples of this include our free mom verse and dad joke GPT offerings that encouraged customers to use our generative AI powered tools to create a special poem or lyric for their mothers and a hysterical joke for their father.

Great. Examples of this include our Fremont versus and dad, Joe GPT offerings that encouraged customers to use our generative AI powered tools to create a special poem or lyric for their mothers and historical job for their followers.

Speaker 1: We're further integrating this generative AI technology into many facets of our customer engagement.

The further integrating this generative AI technology into many facets of our customer engagements.

Jim McCann: This is sort of a story of a reversion to the mean. While it is very difficult to predict precisely when we will see more favorable environments for consumer discretionary spend, we believe that with regard to revenue growth and margin recovery, it is a question of when not if. The actions we have taken to enhance the customer experience, improve margins, and optimize expenses combined with an improved consumer environment will enable us to achieve our historical sales growth, gross profit margin, and epitome margin rates.

Speaker 1: For instance, at checkout, we will use this technology to help customers who may be lost for words.

For instance, at checkout will use this technology to help customers, who may be loss of words express our sentiments and crafts thoughtful messages for the gift recipient.

Speaker 1: express their sentiments and craft thoughtful messages for their people.

Speaker 1: In addition to these initiatives, we also expanded our friends' work organically and through acquisitions at fiscal 23.

In addition to these initiatives, we also expanded offerings, both organically and through acquisitions in fiscal 'twenty three.

Speaker 1: On the acquisition front, we acquired Things Remembered in January and launched a new website on our platform.

On the acquisition front, we acquired things remembered in January and launched a new website.

On our platform in April .

Speaker 1: The perfect example of a tuck-in acquisition that enables us to further expand our leadership position and product offerings in the personalization category and the B2B.

The Perfect example of a tuck in acquisition that enables us to further expand our leadership position and product offerings in the personalization category and the <unk> gifting space.

Jim McCann: For these reasons, we remain very optimistic about our prospects and our confidence that we are positioned well to perform and grow our company while building Shea Holde value.

Speaker 1: This edition, much like Sherry's Berries, demonstrates how our e-commerce platform was built for rapid growth as we seamlessly incorporate complementary brands into our platform by essentially just purchasing their IP.

This addition, much like cherries berries demonstrates how our E. Commerce platform was built for rapid growth as we seamlessly incorporate complementary brands into our platform by essentially just purchasing their IP.

Tom Hartnett: I will now turn the call over to Tom for an update on the business. Thanks Jim, and good morning everyone. Our fourth quarter adjusted Epidae improved over $10 million from the prior year, as we continue to successfully navigate an ever-changing and complex consumer environment. We entered fiscal 2023, and we anticipated that consumers would be challenged by ongoing inflationary pressures, which was further exacerbated by rising interest rates and increasing fears about recession.

Speaker 1: Turning to our margins, as we had anticipated, we continue to see our gross margin improved during the fourth quarter and our entire organization did a great job of managing operating expenses that helped us set the revenue into corn.

Turning to our margins as we had anticipated we continue to see our gross margin improved during the fourth quarter and our entire organization did a great job managing operating expenses that helped to offset the revenue decline.

Speaker 1: that's built will discuss in more detail our fourth quarter gross margin improves significantly. We also continue to match.

Bill will discuss in more detail, our fourth quarter gross margin improved significantly.

We also continued to manage the business well in this environment.

Tom Hartnett: As we move from the holiday period during our fiscal second quarter into the second half of our fiscal year, we saw consumers pull their purse strings even tighter, especially outside of the holiday gifting periods. As a result, our fourth quarter sales declined 14.8 percent, and on a full-year basis, they declined 7.9 percent, excluding the impact of the 53rd week a year ago.

Speaker 1: Our efforts to operate more efficiently couple of our decisions to focus more on nurturing our existing customers enable us to reduce operating costs by $18.7 million during the fourth quarter by $51.7 million for the fiscal year, excluding the impairment charge taken in the third quarter.

Our efforts to operate more efficiently coupled with our decision to focus more on nurturing our existing customers enabled us to reduce operating costs by $18 7 million during the fourth quarter by $51 $7 million for the fiscal year, excluding the impairment charge taken in the third quarter.

Speaker 1: As we turn to fiscal 2024, we will continue to leverage our tremendous portfolio of brands to encourage multi-brand shopping and focus our efforts to grow everyday gifting across our brands to support the top-long.

As we turn to fiscal 2024, we will continue to leverage our tremendous portfolio of brands to encourage multi brand shopping and focus our efforts to grow everyday gifting across our brands to support the top line.

Tom Hartnett: However, we believe it's important to place this in the proper context. While sales declined 8 percent for the fiscal year, this was against the backdrop of an almost doubling ourselves since fiscal 2019. Despite the challenging macro environment, we're able to retain the majority of the revenues that we gained over the last few years. In fiscal 2023, we had revenues of $2 billion, and over 11 million customers, spent more than 25 million gifts.

Speaker 1: Simultaneously, we are focused on enhancing the customer experience, improving margins, and optimizing expenses.

Maintaining asleep, we are focused on enhancing the customer experience.

Proving margins and optimizing expenses.

Now I'll turn it over to bill to provide the financial review.

Thanks, Tom.

Speaker 5: Some highlighted in his discussion of fourth quarter adjusted EBDA came in better than our expectation.

As Tom highlighted in his discussion of fourth quarter, adjusted EBITDA came in better than our expectations.

Speaker 5: Many of the trends that we experienced throughout the fiscal year persisted into the fourth quarter.

Any of the trends that we experienced throughout the fiscal year persisted into the fourth quarter.

Tom Hartnett: Simply put, we are a bigger, better, stronger company today than we were just a few years ago. By focusing on the frequency and retention of our existing customer base, sales from existing customers represented 70 percent of our revenue in fiscal 23. While we were focused on marketing efficiency in a soft to consumer environment, we nonetheless added 4.8 million new customers during fiscal 23. As a consumer facing company, growing our customer base will always be important, but we see tremendous opportunity in increasing the lifetime value of our existing customer base by converting them into multi-brand customers.

Speaker 5: This included continued pressure on our top line, which was mitigated by our improvement of our gross margin that began in the second quarter and by our continued efforts to optimize expenses and operate more efficiently.

This included continued pressure on our top line, which was mitigated by our improvement of our gross margin that began in the second quarter and by our continued efforts to optimize expenses and operate more efficiently.

Let's take a moment to review each of these.

Speaker 5: Throughout the fiscal year and continuing into the fourth quarter, our top line continues to be pressured by a complex consumer environment.

About the fiscal year and continue into the fourth quarter, our topline continues to be pressured by a complex consumer environment.

Speaker 5: As consumers were challenged by ongoing and placenary pressures, escalating interest rates and higher credit card debt, they reduced their discretionary expense.

As consumers were challenged by ongoing inflationary pressures escalating interest rates and higher credit card debt they've reduced their discretionary spending.

Speaker 5: As a result, a fourth quarter revenue declined 17.9% or 14.8%, excluding the impact of the 53rd week in the prior year.

As a result, our fourth quarter revenue declined 17, 9% or 14, 8%, excluding the impact of the 50 <unk> week in the prior year.

Speaker 5: We experience stronger performance during our holiday periods, principally Christmas, while we show the pullback in consumer spending impact demand for everyday gifts.

Tom Hartnett: Multibrand customers currently represent approximately 13% of our customer base, yet they account for approximately 28% of our revenue. Additionally, we have over 1.3 million celebrations passport members who are encouraged to use their benefits across our family of brands. We've already implemented several initiatives to increase these metrics. This includes highlighting our family of brands across our websites and enhancing our search function to provide relevant gifting ideas from our portfolio of brands on a single results page.

We experienced stronger performance during our holiday periods, principally Christmas while we saw the pullback in consumer spending impact demand for everyday gifting.

Speaker 5: Let's turn to our Gross Prophet, Margin, which is a much more interesting story.

Now, let's turn to our gross profit margin, which is a much more interesting story for us.

Speaker 5: As we had anticipated, we began to experience an improvement in our gross margin, beginning in the second quarter.

As we had anticipated we began to experience an improvement in our gross margin beginning in the second quarter.

Speaker 5: First margin benefited from our strategic pricing initiatives, lower ocean freight course and during the back half of the year, a decline in certain commodity course and lower inventory rider.

Gross margin benefited from our strategic pricing initiatives lower ocean freight cost during the back half of the year a decline in certain commodity cost and lower inventory write offs.

Speaker 5: As a result, our gross margin improved 90 basis points during the second quarter, 80 basis points during the third quarter, and accelerated to 340 basis points during the fourth.

As a result, our gross margin improved 90 basis points during the second quarter 80 basis points during the third quarter and accelerated to 340 basis points during the fourth quarter.

Tom Hartnett: And by leveraging our brand agnostic warehouse to fill up facilities, we can offer unique bundles for customers to create a truly special one-of-a-kind gift. Throughout fiscal 23, we continue to see strong growth in our higher price point across brand bundles as customers continue to gravitate towards these higher value offerings. As a result, our AOV increased approximately 6% for the year. We will continue to expand our price points both lower and higher to provide gifting options for all our customers.

Speaker 5: But at fiscal year, a gross margin improved 30 basis points to 37.5% as this annual number was weighed down by our first quarter results. It is important to have-

For the fiscal year, our gross margin improved 30 basis points to 37, 5% as this annual number was weighed down by our first quarter results.

It is important to highlight that as we look forward.

Speaker 5: We expect our gross margin to continue. It's returned to restore all levels in the low 40s percent.

We expect our gross margin to continue its returning to historical levels in the low 40% range.

Speaker 5: In light of the top line challenges, our team has been focused on controlling the variables we can control and has been steadfast in optimizing it.

In light of the topline challenges our team has been focused on controlling the variables. We can control and has been steadfast in optimizing expenses.

Speaker 5: We were just operating expenses by 18.7 million or 9.8% for the quarter as compared to the prior year and 51.7 million or 6.6% for the full year excluding the impairment charge that was recorded during the third.

We reduced operating expenses by $18 7 million or nine 8% for the quarter as compared to the prior year and $51 7 million or six 6% for the full year, excluding the impairment charge that was recorded during the third quarter.

Tom Hartnett: This includes providing free digital products to help our customers stay connected with the important people in their lives. Great examples of this include our free momverse and dad joke GPT offerings that encouraged customers to use our generative AI-powered tools to create a special poem or lyrics for their mothers and a hysterical joke for their fathers. To further integrating this generative AI technology into many facets of our customer engagements. For instance, at checkout we will use this technology to help customers who may be lost for words, express their sentiments and craft thoughtful messages for their gift recipient. In addition to these initiatives, we also expanded our offerings both organically and through acquisitions at fiscal 23.

Speaker 5: As a result, our fourth quarter of adjusted EBDA improved by 10.2 million to a loss of 6.6 million as compared to the prior year despite the top line pressure.

As a result, our fourth quarter adjusted EBITDA improved by $10 2 million to a loss of $6 6 million as compared to the prior year. Despite the topline pressure.

Speaker 5: A four-year basis, our Justity Vida was 91.2 million, representing a decline of 7.8 million, primarily due to the aforementioned revolutions.

On a full year basis, our adjusted EBITDA was $91 2 million, representing a decline of $7 8 million, primarily due to the aforementioned revenue decline power.

Speaker 5: However, it should be noted that since the first quarter are your overyear adjusted EBITDA has improved by nearly $15 million.

However, it should be noted that since the first quarter our year over year adjusted EBITDA has improved by nearly $15 million.

Speaker 5: Net loss for the quarter was 22.5 million or 35 cents per share compared with the net loss of 22.3 million or 34 cents per share in the priority.

Net loss for the quarter was $22 5 million or <unk> 35 per share compared with a net loss of $22 3 million or <unk> 34 per share in the prior year period.

Tom Hartnett: On the acquisition front, we acquired things remembered in January and launched a new website on our platform in April. The perfect example of a tuck-in acquisition that enables us to further expand our leadership position and product offerings in the personalization category and the B2B gifting space. This addition, much like Sherry's berries, demonstrates how our e-commerce platform was built for rapid growth as we seamlessly incorporate complementary brands into our platform by essentially just purchasing their IP.

Speaker 5: adjusted net loss for $17.8 million or $0.28 per share compared with an adjusted net loss of $21.8 million or $0.34 per share in the prior year period.

Adjusted net loss was $17 8 million or 28 cents per share compared to an adjusted net loss of $21 8 million or <unk> 34 per share in the prior year period.

For the fiscal year 'twenty three.

Speaker 5: The net loss was 44.7 million or 69 cents per share, which includes an aftertax non-cash goodwill and intangible asset impairment charge of 57.8 million or 89 cents per share.

The net loss was $44 7 million or <unk> 69 per share, which includes an after tax noncash goodwill and intangible asset impairment charge of $57 8 million or <unk> 89 per share compared with net income of $29 6 million or <unk> 45 per diluted share in the prior year period.

Speaker 5: You can get with net income of 29.6 million or 45 cents per diluted share in the prior year.

Tom Hartnett: Starting to our margins, as we had anticipated, we continued to see our gross margin improved during the fourth quarter and our entire organization did a great job of managing operating expenses that helped us set the revenue decline. As Bill will discuss in more detail, our fourth quarter gross margin improved significantly. We also continued to manage the business well in this environment. Our efforts to operate more efficiently, coupled with our decision to focus more on nurturing our existing customers, enable us to reduce operating costs by $18.7 million during the fourth quarter and by $51.7 million for the fiscal year, excluding the impairment charts taken in the third quarter.

Speaker 5: Adjusted net income for the year was 13.4 million or 21 cents per diluted share in the prior year period.

Adjusted net income for the year was $13 4 million was <unk> 21 per diluted share compared with adjusted net income of $32 9 million or <unk> 50 per diluted share in the prior year period.

Now, let's review our segment results.

Speaker 5: In our gourmet food and gift basket segment, revenue for the quarter was 120.7 million. The climbing 18.7% compared to the 148.4 million in the prior year.

In our gourmet food and gift baskets segment revenue for the quarter was $127 million declining 18, 7% compared with $148 4 million in the prior year period.

Speaker 5: The proper margin improved 490 basis points to 28.1% compared with 23.2% in the prior year period. The improvement was led by our strategic pricing initiatives, lower ocean freight course, and improvement in certain commodity course, and lower inventory ride-off.

Gross profit margin improved 490 basis points to 28, 1% compared with 23, 2% in the prior year period.

Movement was led by our strategic pricing initiatives lower ocean freight costs and improvement in certain commodity costs and lower inventory write offs.

Tom Hartnett: As we turn to fiscal 2024, we will continue to leverage our tremendous portfolio of brands to encourage multi-brand shopping and focus our efforts to grow everyday gifting across our brands to support the top line. Simultaneously, we are focused on enhancing the customer experience, improving margins, and optimizing expenses.

Speaker 5: The second contribution margin loss was 13.4 million compared with the second contribution margin loss of 23.7 million in a prior year period. It was like the aforementioned improvement of those margin as well as more efficient marketing.

Segment contribution margin loss was $13 4 million compared with the segment contribution margin loss of $23 7 million in the prior year period.

Reflecting the aforementioned improvement in gross margin as well as more efficient marketing spend.

Speaker 5: For the year, revenue in this segment decreased 3.9% to $965.2 million, compared with $1 billion in the price.

For the year revenue in this segment decreased three 9% to $965 2 million compared with $1 billion in the prior year.

Bill Shea: Now I'll turn it over to Bill to provide the financial review. Thanks Tom. As Tom highlighted in his discussion, our fourth quarter adjusted EBITDA came in better than our expectations. Many of the trends that we experienced throughout the fiscal year persisted into the fourth quarter. This included continued pressure on our top line, which was mitigated by our improvement of a gross margin that began in the second quarter, and by our continued efforts to optimize expenses and operate more efficiently.

Speaker 5: The profit margin for the year was 34.9%, and there were 34.2% in the prior year. And adjusted the segment contribution margin for the year without the third quarter in payment charge was 77.5 million, and there were 64.9 million in the prior year. And large part due to the results of the fourth.

Profit margin for the year was 34, 9% compared with 34, 2% in the prior year and adjusted segment contribution margin for the year without the third quarter impairment charge was $77 5 million compared with $64 9 million in the prior year in large part due to the results of the fourth quarter.

Speaker 5: Now consumer flow and gift segment. Revenue for the quarter was 248.3 million, declining 17%, compared to 299 million in the prior year.

In our consumer floral and gift segment revenue for the quarter was $248 3 million declining, 17% compared with $299 million in the prior year period.

Bill Shea: The second moment to review each of these. Throughout the fiscal year and continuing into the fourth quarter, our top line continued to be pressured by a complex consumer environment. As consumers were challenged by ongoing inflationary pressures, escalating interest rates, and higher credit card debt, they reduced their discretionary spending. As a result, a fourth quarter revenues declined 17.9% or 14.8% excluding the impact of the 53rd week in the prior year. We experienced stronger performance during our holiday periods, principally Christmas, while we saw the pullback in consumer spending impact demand for everyday gifting.

Speaker 5: 5th margin, improve 260 basis points to 40.6%, compare with 38% in the prior year period.

Its profit margin improved 260 basis points to 46% compared with 38% in the prior year period.

Speaker 5: Segment contribution margin was 30.7 million. We have a segment contribution margin of 26.5 million in the prior year.

And segment contribution margin was $30 7 million average segment contribution margin of $26 5 million in the prior year period.

Speaker 5: Revenue decreased 13.1% to 920 million, compared to 1.06 billion in the price.

For the year.

Revenues decreased 13, 1% to $920 million compared with $1 6 billion in the prior year.

Speaker 5: The small gym was 39.5% to be able to 39.3% in the prize.

Gross margin was 39, 5% compared with 39, 3% in the prior year and segment contribution margin was $95 5 million compared with $104 3 million in the prior year.

Speaker 5: And the second contribution module was 95.5 million, compared with 104.3 million in the prior year.

Bill Shea: Now let's turn to our gross profit margin, which is a much more interesting story for us. As we had anticipated, we began to experience an improvement in our gross margin, beginning in the second quarter. Gross margin benefited from our strategic pricing initiatives, lower ocean freight costs, and during the back half of the year, a decline in certain commodity costs, and lower inventory riders. As a result, our gross margin improved 90 basis points during the second quarter, 80 basis points during the third quarter, and accelerated the 340 basis points during the fourth quarter.

Our <unk> segment.

Speaker 5: Revenue for the quarter, decrease 22.1%, and 30 million, compared with 38.5 million in the prior year period. This profit margin was...

Revenue for the quarter decreased 22, 1%.

$30 million compared with $38 5 million in the prior year period.

Gross profit margin was 42, 6%.

Speaker 5: paper 39.6% in the prior year, primarily reflecting ocean shipping costs as well as product.

Compared with 39, 6% in the prior year, primarily reflecting ocean shipping costs as well as product mix.

Speaker 5: The 7 contribution margin was $7.4 million, but over $10 million in the prior year.

Segment contribution margin was $7 4 million compared with $10 million in the prior year period.

Year revenue decreased eight 6% to $133 2 million compared with $145 7 million in the prior year.

Speaker 5: Here, revenue decreased 8.6% to 133.2 million, compared with 145.7 million in a price.

Bill Shea: But at fiscal year, our gross margin improved 30 basis points at 37.5%, as this annual number was weighed down by our first quarter results. It is important to highlight that as we look forward, we expect our gross margin to continue its return to restore all levels in a low 40% range.

Speaker 5: Profit margin was 42.7% compared with 42.3% in the prior year. And segment contribution margin for the year was 37.2 million compared with 42.5 million in the prior year.

This profit margin was 42, 7% compared with 42, 3% in the prior year and segment contribution margin for the year was $37 2 million compared with $42 5 million in the prior year.

Regarding free cash flow.

Speaker 5: year we generated free cash flow of 70.7 million and improvement of over 130 million from the price.

For the year, we generated free cash flow of $70 7 million an improvement of over $130 million from the prior year.

Bill Shea: In light of the top line challenges, our team has been focused on controlling the variables we can control and has been steadfast in optimizing expenses. We reduced operating expenses by 18.7 million or 9.8% for the quarter, as compared to the prior year, and 51.7 million or 6.6% for the full year excluding the impairment charge that was recorded during the third quarter. As a result, our fourth quarter adjusted EBITDA improved by 10.2 million to a loss of 6.6 million, as compared to the prior year despite the top line pressure.

Speaker 5: We have primarily reflects our efforts to bring inventory more in line with operations as we solved through non-perishable inventory. We purchased a year ago when we faced supply chain chain constraint.

Primarily reflects our efforts to bring inventory more in line with operations as we sold through non perishable inventory, we purchased a year ago, when we face supply chain constraints.

Speaker 5: Before I turn to our balance sheet, I wanted to highlight that we amended an extended accredited agreement on June 27th.

Before I turn to our balance sheet I wanted to highlight that we amended and extended our credit agreement on June 27th.

Speaker 5: We entered into a five-year, $425 million credit agreement comprised of a $200 million term loan and $225 million revolving credit facility, which further enhances our strong balance sheet.

We entered into a five year 425 million dollar credit agreement comprised of a $200 million term loan and $225 million revolving credit facility, which further enhances our strong balance sheet.

Bill Shea: On a four-year basis, our adjusted EBITDA was 91.2 million, representing a decline of 7.8 million, primarily due to the aforementioned revenue decline. However, it should be noted that since the first quarter, our year-over-year adjusted EBITDA has improved by nearly $15 million. Net loss for the quarter was 22.5 million or 35 cents per share, compared with a net loss of 22.3 million or 34 cents per share in the priority of period. Adjusted net loss for 17.8 million or 28 cents per share, compared with an adjusted net loss of 21.8 million or 34 cents per share in the priority of period.

Turning to our balance sheet.

Speaker 5: At the end of fiscal 23, our cash and investment position was $126.8 million compared with $31.5 million at the end of fiscal 2020.

At the end of fiscal 'twenty, three our cash and investment position was $126 8 million compared with $31 5 million at the end of fiscal 'twenty two.

Speaker 5: Inventory, decline 56.3 million 291.3 million

Inventory declined $56 3 million to $191 3 million.

Speaker 5: Increasing cash reflects the working capital benefit of selling through non-parasurable inventory, the reduction in catbacks, and closing the new credit facility.

The increase in cash reflects the working capital benefit of selling through non perishable inventory the reduction in Capex and closing the new credit facility.

As a reminder, in the prior two fiscal years capital expenditures were elevated to support our investments in automation.

Speaker 5: And prior to fiscal years, capital expenditures were elevated to support our investments in automation at our Hebrew and Ohio.

Bill Shea: For the fiscal year 23, the net loss was 44.7 million or 69 cents per share, which includes an aftertax non-cash goodwill and intangible asset impairment charge of 57.8 million or 89 cents per share, compared with net income of 29.6 million or 45 cents per deluded share in the priority of period. Adjusted net income for the year was 13.4 million or 21 cents per deluded share, compared with an adjusted net income of 32.9 million or 50 cents per deluded share in the priority of period.

At our Hebron, Ohio, and Atlanta facilities.

Speaker 5: terms of debt. We had 196.4 million in term debt and no borrowings under violent credit.

In terms of debt, we had $196 4 million in term debt and no borrowings under our revolving credit facility.

Speaker 5: And on net debt position improved by $61 million to $70 million, compared with $131 million a year ago.

And our net debt position improved by $61 million to $70 million compared with $131 million a year ago.

Regarding guidance for fiscal 'twenty four.

Speaker 5: As we turn to Frisco 24, there are several fractures that contributed to our guidance.

As we turn to fiscal 'twenty four there are several factors that contributed to our guidance.

Speaker 5: First, we expect consumers to continue to moderate their spending in the current environment.

First we expect consumers to continue to moderate their spending in the current environment.

Bill Shea: Now let's review our segment results. In our gourmet food and gift basket segment, revenue for the quarter was 120.7 million, declining 18.7% compared with 148.4 million in the priority of period. This proper margin improved 490 basis points to 28.1%, compared with 23.2% in the priority of period. The improvement was led by our strategic pricing initiatives, lower ocean freight course and improvement in certain commodity course and lower inventory rate loss. The second contribution margin loss was 13.4 million, compared with the second contribution margin loss of 23.7 million in the priority of period, reflecting the aforementioned improvement in those margins, as well as more efficient marketing spend.

Speaker 5: impacted by higher interest rates, higher credit card balances, and resumption of student loan repayment.

Impacted by higher interest rates higher credit card balances and prism and the resumption of student loan repayments.

We expect revenues to remain pressured during the first half of the fiscal year and begin to rebound during the holiday period and into the second half.

Speaker 5: We expect revenues to remain pressured during the first half of the fiscal year and begin to rebound during the holiday period and into the second half.

Speaker 5: Second, we expect our gross margins to continue to improve as we benefit from ocean freight rates better approaching pre-pandemic levels, certain commodity costs that continue to revert to their mean and efficiencies from our automation investments.

Second we expect our gross margins to continue to improve as we benefit from ocean freight rates that are approaching pre pandemic levels certain commodity costs that continue to revert to the mean inefficiencies from our automation investments.

Speaker 5: As a result, we expect our fiscal 24 margins to be just north of 39%, we have a 37.5% in fiscal 23.

As a result, we expect our fiscal 'twenty for margins to be just north of 39% compared with 37, 5% in fiscal 'twenty three.

Speaker 5: Just as a reminder, there are seasonal variations on our quarterly gross margin due to salesmen.

Just as a reminder, there are seasonal variations on a quarterly gross margin due to sales mix.

Bill Shea: For the year, revenue in the segment decreased 3.9% to 965.2 million, compared with a billion dollars in the priority year. The proper margin for the year was 34.9%, compared with 34.2% in the priority year, and adjusted the segment contribution margin for the year without the third quarter in payment charge was 77.5 million, compared with 64.9 million in the priority year, in large part due to the results of the fourth quarter. The consumer flow and gift segment, revenue for the quarter was 248.3 million, declining 17%, compared with 299 million in the priority period. The proper margin improved 260 basis points to 40.6%, compared with 38% in the priority period, and segment contribution margin was 30.7 million, compared with segment contribution margin of 26.5 million in the priority period.

Speaker 5: Third, our guidance assumes increased compensation expenses.

Third.

Our guidance assumes increased compensation expense, which includes a full bonus payout in fiscal 'twenty four compared with a partial bonus payout in fiscal 'twenty three.

Speaker 5: which includes a full bonus payout in fiscal 24 and pay with a partial bonus payout in fiscal 23. This amounts to approximately $13 million increase.

This amounts to approximately $13 million increase.

Based on these assumptions we expect.

Speaker 5: Total revenues on a percentage basis to decline in the mid-single digits as compared to the prior year. Adjusted EBIDA to be in a range of 95 to 100 million and free cash for

Total revenues on a percentage basis to decline in the mid single digits as compared to the prior year adjusted.

Adjusted EBITDA to be in a range of $95 million to $100 million.

And free cash flow to be in the range of $60 million to $65 million.

Speaker 4: Phil, let me actually do something here. When we were prepping for this, you had an interesting summary of where we were last year as compared to this year. Maybe it would help if you ran through that again briefly. Sure, Jim.

Bill Let me ask you to do something here when we were prepping for this you had.

Interesting.

A summary of where we were last year as compared to this year, maybe it would help if you ran through that again briefly.

Sure Jim.

As we began to prepare for today.

Bill Shea: For the year, revenues decreased 13.1% to 920 million, compared with 1.06 billion in the priority year. The margin was 39.5%, compared with 39.3% in the priority year, and segment contribution margin was 95.5 million, compared with 104.3 million in the priority year.

Speaker 5: It was really striking to me to reflect on where we were just a year ago and where we are today.

He was really striking to me to reflect on where we were just a year ago and where we are today.

Speaker 5: The supply chain challenges and labor issues that we discussed a year ago have dissipated.

The supply chain challenges and labor issues that we discussed a year ago has dissipated.

We were able to manage our operations and reduce our inventory by $56 million.

Speaker 5: We were able to manage our operations and reduce our inventory by $56 million.

Speaker 5: We generated positive free cash flow of $70.7 million this year as compared to a negative $61.2 million last year.

We generated positive free cash flow of $77 million this year as compared to a negative $61 2 million last year.

Bill Shea: Now, blue meant segment, revenue for the quarter decreased 22.1% to 30 million, compared with 38.5 million in the priority period. The profit margin was 42.6%, compared with 39.6% in the priority year, primarily reflecting ocean shipping costs as well as products. 7 contribution margin with 7.4 million if we have a 10 million in the prior year period. Year, revenue decreased 8.6% to 133.2 million if we have a 145.7 million in the prior year. This profit margin was 42.7% if we have a 42.3% in the prior year and segment contribution margin for the year, was 37.2 million and paid with 42.5 million in the prior year.

Speaker 5: Our gross margin trend inflected during the second quarter, and its improvement continued throughout fiscal 23, which will continue in fiscal 24.

Our gross margin trend inflicted during the second quarter and its improvement continued throughout fiscal 'twenty three.

Which will continue in fiscal 'twenty four and beyond.

Speaker 5: We were able to efficiently operate our business and reduce operating costs by over $50 million.

We were able to efficiently operate our business and reduce operating cost by over $50 million.

Speaker 5: and we secured a new five-year credit facility that further enhances our already strong balance sheet. A critical accomplishment in...

And we secured a new five year credit facility that further enhances our already strong balance sheet.

A critical accomplishment in these complicated times.

Speaker 5: While the consumer environment remains challenging, our company has never been better positioned to serve them when they are ready to shop.

While the consumer environment remains challenging our company has never been better positioned to serve them when they are ready to shop.

Speaker 5: and we are well positioned to achieve our historical revenue growth, gross margin, and adjusted EBITDA margin rates over the longer term. With that, I'll stop there.

And we are well positioned to achieve our historical revenue growth gross margin and adjusted EBITDA margin rates over the longer term.

With that I will turn the call back to you Jim.

Bill Shea: Blooding free cash flow. For the year, we generated free cash flow of 70.7 million and improvement of over 130 million from the prior year. This primarily reflects our efforts to bring inventory more in line with operations as we sold through non-parasurable inventory we purchased a year ago when we face supply chain constraints.

Speaker 4: Thanks Bill, I think that summary paints a picture. Sometimes you need to step back a little bit to see what you've been able to accomplish in a year and the tonality last year was obviously very different. So I think you can get a picture from Bill's summary there from Tom's comments about why we have confidence.

Thanks, Bill I think the summary paints a picture and sometimes you need to step back a little bit to see what you've been able to accomplish a year in the tonality last year was obviously very different. So I think you can get a picture from Bill summary, there from Tom's comments about why we have confidence that the a year or two or three ahead barring the unforeseen.

Speaker 4: that the year or two or three ahead, barring the unforeseen, and there is always the unforeseen, looked quite attractive for us because of the steps we've taken and because of the benefits of the macro environment reverting more.

Bill Shea: Before I turn to our balance sheet, I wanted to highlight that we amended an extended or credit agreement on June 27th. We entered into a 5-year, $425 million credit agreement comprised of a $200 million term loan and $225 million revolving credit facility, which further enhances our strong balance sheet. Turning to our balance sheet. At the end of fiscal 23, our cash and investment position was $126.8 million compared with $31.5 million at the end of fiscal 22.

And there is always the unforeseen look quite attractive for us because of the steps, we've taken and because of the benefits of the macro environment reverting more to the mean I think it's appropriate now that we open the call for a question. So I'll ask the operator, if you could please restate the instructions for those interested in asking a question.

Speaker 4: I think it's appropriate now that we open the call for a question. So I'll ask the operator if you could please restate the instructions for those interested in asking a question.

Speaker 6: We will now begin the question and answer session. Do ask a question you may press star than one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star than two. At this time, we will pause momentarily to assemble our roster.

We will now begin the question and answer session.

Ask any question you May Press Star then one on your Touchtone phone.

If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

Bill Shea: Inventory declined $56.3 million to $191.3 million. The increasing cash reflects the working capital benefit of selling through non-parasurable inventory, the reduction in CAPEX, and closing the new credit facility. As a reminder, in the prior two fiscal years, capital expenditures were elevated to support our investments in automation at our Hebron Ohio and Atlanta facilities. In terms of debt, we had $196.4 million in term debt and no borrowings under our revolving credit facility. In a net debt position, improved by $61 million to $70 million compared with $131 million a year ago.

At this time, we will pause momentarily to assemble our roster.

Speaker 6: the first question comes from Michael Kupinski with Noble Capital Markets. Please go ahead.

The first question comes from Michael Kaplinsky with Noble capital markets. Please go ahead.

Speaker 7: Thank you and good morning everyone. A couple of questions here. You talked a little bit about your labor, and I was just wondering if you can give us a little bit more color on maybe the pricing for labor. I know that there was been some significant increase in years prior. And then also the ability to fill the spots that you have. And given your improvement in production and distribution facilities, I was warning if you can talk a little bit about.

Thank you and good morning, everyone.

Couple of questions here can you talk a little bit about your labor and I was just wondering if you can give.

<unk>.

A little bit more color on maybe the pricing for labor I know that there was been significant increases.

Prior and then also the ability to fill the spots that you have and given your improvement in production and distribution facilities. I was wondering if you could talk a little bit about how many people you needed this year versus.

Jim McCann: Starting guidance for fiscal 24. As we turn to fiscal 24, there are several factors that contributed to our guidance. First, we expect consumers to continue to moderate their spending in the current environment, impacted by higher interest rates, higher credit card balances, and the resumption of student loan repayments. We expect revenues to remain pressured during the first half of the fiscal year and begin to rebound during the holiday period and into the second half.

Speaker 7: how many people you needed this year versus years past. And I just have a couple of quick follow-ups.

Pat can I just have a couple of quick follow ups.

Good morning, Michael Jim here.

Speaker 4: to tackle your questions on the labor front, build it into details, but just from a broader perspective, two factors, one is cost have gone up on labor. So let's focus first on entry-level, logistic and warehouse kind of.

To tackle your questions on the Labor front Bill give you the details, but just from a broader perspective too.

Two factors one as costs have gone up on labor. So, let's focus first on entry level logistic and warehouse kind of labor.

Speaker 4: So two years ago our costs there were about $12 an hour, and now they're closer to $20.

Two years ago, our cost there were about $12 an hour and now they are now they are closer to $20 an hour.

Jim McCann: Second, we expect our gross margins to continue to improve as we benefit from ocean freight rates that are approaching pre-pandemic levels, certain commodity costs that continue to revert to their mean and efficiencies from our automation investments. As a result, we expect our fiscal 24 margins to be just north of 39%, compared with 37.5% in fiscal 23. Just as a reminder, there are seasonal variations on our quarterly gross margin due to sales mix.

Speaker 4: Last year we not only did we have the course of labor, but we had availability issues when I say last year, a year ago. So this past Christmas, Christmas of 22, we were able to fill all of our temporary holidays.

Last year, we not only do we have the cost of labor, we had availability issues when I say last year a year ago. So this past Christmas Christmas of 2002, we were able to fill all of our temporary holiday positions the year before we werent able to the benefit. This year was yes, we had a higher labor cost.

Speaker 4: Before we weren't able to the benefit this year was yes, we had the higher labor costs but by being able to fill every

But by being able to fill every position.

Jim McCann: Third, our guidance assumes increased compensation expense, which includes a full bonus payout in fiscal 24 and paired with a possible bonus payout in fiscal 22. This amounts to a approximately $13 million increase. Based on these assumptions, we expect total revenues on a percentage basis to decline in the mid-single digits as compared to the prior year. Adjusted EBIDA to be in a range of 95-100 million and free cash flow to be in a range of 60-65 million.

Speaker 4: We didn't run the real high overtime course that we've had to ask people to work extra. Bill, Michael also asked about efficiencies and you have an example there in terms of your automation and a number of packages we could ship out maybe in particular.

We didn't run the real high overtime costs, when we get I'd ask people to work there.

Michael also ask you about efficiencies.

Uh huh.

An example, there in terms of the automation and number of packages, we can ship out maybe and particularly to talk about our Ohio distribution facility.

Yes, Michael if you recall.

We automated our Ohio facility.

Speaker 5: years ago, but it was late because the supply chain challenges are getting sealed in.

Two years ago, but it was late because of supply chain challenges of getting the steel and so.

So we moved about.

Speaker 5: 125,000 packages on a peak day this past Christmas out of that facility, versus a year prior we were in like about 80-88.

125000 packages on a peak day. This past this past business out of that facility versus the EFI. We were in about 80, 80, 880, 885000, and we get it with less labor and we did it so it used to be the peak before that would be one day and I think this year, we did six days in AR.

Jim McCann: Bill, let me ask you to do something here. When we were prepping for this, you had an interesting summary of where we were last year as compared to this year. Maybe it would help if you ran through that again briefly. Sure, Jim. As we began to prepare for today, it was really striking to me to reflect on where we were just a year ago and where we are today. The supply chain challenges and labor issues that we discussed a year ago have dissipated.

Speaker 4: We did it first, so 100 would use to be the pink before that would be one day. And I think this year we did six days in a row of over 100,000.

ROA of over 100000 packages, so and we did that bill was it a third less labor.

Speaker 4: And we did that bill, we said, a third, less late.

Speaker 5: Not quite that, but we certainly did it with less labor. And now what we implemented last year, so this upcoming year will be the third year of that facility, so we'll get more efficiency out of that facility. It will be the second year of that facility.

Not quite that but we did we certainly did it with less labor and now what we are.

Jim McCann: We were able to manage our operations and reduce our inventory by $56 million. We generated positive free cash flow of 70.7 million this year as compared to a negative 61.2 million last year. Our gross margin trend inflected during the second quarter and its improvement continued throughout fiscal 23, which will continue in fiscal 24 and beyond. We were able to efficiently operate our business and reduce operating costs by over $50 million. We secured a new five-year credit facility that further enhances our already strong balance sheet, a critical accomplishment in these complicated times.

We implemented last year. So we'll have this upcoming year will be the third year of that facility. So we'll get more efficiency out of that facility will be the second year of our Atlanta facility that came on late the automation.

Speaker 5: That came on late the automation. You know, last year in November , again, because of...

Last year in November again, because of the supply chain challenges. So we'll have that is the second year and we also put some automation efforts into our Mexican facility, which went live last year as well, we will get the second year.

Speaker 5: So we'll have that as the second year. And we also put some automation efforts into our med.

Speaker 5: last year as well. We'll get the second year of that. So our efficiency will continue.

That so our efficiencies will continue to improve in fiscal 'twenty, four because just having more experience and having a kind of.

Speaker 5: for just having more experience and having a kind of, you know, lady.

Ladies and for a full year of two new facilities.

Speaker 8: Tom just to add on just I think where your questions partially going is you know What are we seeing going forward for the holiday season and a ramp and right now? We're seeing a pretty good environment. We think we'll be fine in getting the folks we need and talking to our partners And you know also while we don't expect rates to go up

And Michael It's Tom I'll just add.

To add on just I think what your question is partially going is what are we seeing going forward for the holiday season, and a ramp in right now.

Jim McCann: While the consumer environment remains challenging, our company has never been better positioned to serve them when they are ready to shop. We are well positioned to achieve our historical revenue growth, gross margin and adjusted EBITDA margin rates over the longer term. With that, I will turn the call back to you, Jim. Thanks Bill. I think that summary paints a picture. Sometimes you need to step back a little bit to see what you have been able to accomplish in a year and the tonality last year was obviously very different.

We're seeing a pretty good environment.

It will be fine and getting the folks we need and talking to our partners.

And also while we don't expect rates to to diminish we don't expect them to rise either so we think we're in good shape here for them.

Speaker 1: And to finish, we don't expect them to rise either. So we think we're in good shape.

Speaker 1: At least, what we stand today. So when we talk about a reversion to the mean, we have no illusion, Michael, about the fact that labor rates aren't going to return to pre-pandemic levels. Those are permanent. So we're very glad we made the invention over the last three now, four years on the automation side of things where that brings the benefit of needing less people and being more productive.

At least where we stand today, so when we're talking about a reversion to the mean, we have no illusion Michael about the fact that labor rates are going to return to pre pandemic levels. Those are permanent. So we're very glad we made the bet over the last three four years on the automation side of things where that brings the benefit of needing less people and be more productive.

Jim McCann: I think you can get a picture from Bill's summary there from Tom's comments about why we have confidence that the year 2-3 head barring the unforeseen and there because of the steps we have taken and because of the benefits of the macro environment reverting more to the mean. I think it is appropriate now to be open to call for a question. So I will ask the operator if you could please restate the instructions for those interested in asking a question.

With those you have.

Speaker 7: Thanks for the color. And is there a way to determine how much of the revenue impact it was due maybe to a shift in lower price product?

Thanks for that color.

Is there a way to determine how much of the revenue impact that was due mainly to a shift in lower priced products.

Speaker 4: But we didn't see much of a shift to lower price products. As Tom pointed out in his comments, we actually had an increase in our average order size. So we think that the lower end of the funnel shopper just wasn't there on those everyday occasions like they might have been during the pandemic. So it wasn't the result of selling lower price items. In fact,

But we didn't see much of a shift to lower price products as Tom pointed out in his comments, we actually had an increase on our average order size. So we think that the lower end of the funnel shopper.

Jim McCann: We will now begin the question and answer session. Do ask a question you may press star than one on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star than two. At this time, we will pause momentarily to assemble our roster.

Just wasn't there on those everyday occasions like they might have been during the pandemic.

It wasn't the result of selling lower priced items in fact, Tom mentioned in his comments too that we both want to increase our average ticket in terms of the range of products that we offer. So we have plans to introduce some more lower priced items at the same time, we were beginning to think that we have the opportunity to increase some higher.

Speaker 4: Tom mentioned in his comments too, that we both want to increase our average ticket in terms of the range of products that we offer. So we have plans to introduce some more lower priced items. At the same time, we're beginning to think that we have the opportunity to increase our average ticket in terms of the range of products that we offer.

Michael Kupinski: The first question comes from Michael Kupinski with Noble Capital Markets. Please go ahead.

Speaker 4: some higher priced items too. So you'll see our range expand.

Jim McCann: Thank you and good morning, everyone. A couple of questions here. You talked a little bit about your labor. I was just wondering if you can give us a little bit more color on maybe the pricing for labor. I know that there was been some significant increase in years prior. And then also the ability to fill the spots that you have. And given your improvement in production and distribution facilities, I was wondering if you can talk a little bit about how many people you needed this year versus your past. And I just have a couple of quick follow-up.

Items, two so youll see our range expand.

Speaker 9: Yeah, I think the lower end, the customers on the lower end of the income scale is where we saw our discretionary income suffer. And so we saw some of those lower price point products drop out.

Yes.

Okay.

The lower end.

Customers on the lower end of the income scale is where we saw our discretionary income suffer.

We saw some of those lower price point products drop out.

Speaker 7: Thank you. And finally, thanks Bill. And finally, the company has been successful in making acquisitions during periods of economic uncertainty and some of your beddest acquisitions. I think that we're during those periods. It was wondering in this environment, are there acquisitions in the pipeline? Can you just talk about the acquisitions and the environment?

Thank you and finally.

Thanks, Bill and probably.

The company has been successful in making acquisitions during periods of economic uncertainty in some of your acquisitions.

Acquisitions, I think were during those periods. It was wondering.

Jim McCann: According to Michael Jim here, to tackle your questions on the labor front, I'll give you the details, but just from a broader perspective, two factors. One is, costs have gone up on labor, so let's focus first on entry-level, logistic and warehouse kind of labor. So two years ago, our costs there were about $12 an hour and now they're closer to $20 an hour. Last year, not only did we have the cost of labor, but we had availability issues when I say last year or a year ago.

In this environment are there.

The acquisitions in the pipeline can you just talk about the acquisition M&A environment.

Speaker 4: Michael, Jim again, on the M&A side of things, yes. We you have seen us in the past when times get tougher, more opportunities present themselves. That's why we're pleased and a little lucky that Bill and I are here.

Michael Jim again on the M&A side of things yes.

You have seen us in the past when times get tougher more opportunities to present themselves.

While we are pleased that although lucky that.

Bill and team secured the financing with our long term banking relationships because we're told that we did our deal at the very end of June and we're told that even the syndication market is having some tightness in it now quite a bit of guidance in that which doesn't bode well for companies that are profitable.

Speaker 4: showed the financing with our long-term banking relationships because we're told that we did our deal at the very end.

Jim McCann: So this past Christmas, Christmas of 22, we were able to fill all of our temporary holiday positions. The year before, we weren't able to. The benefit this year was yes, we had the higher labor costs, but by being able to fill every position, we didn't run the real high overtime costs that we had to ask people to work extra.

Speaker 4: And we're told that even the syndication market is having.

Speaker 4: tightness in it now, quite a bit of tightness in it now, which doesn't bode well for companies that aren't profitable, don't have the history, don't have relationships that we're fortunate enough to have. So yes, that might create some opportunities. We've only done, it's hard to even call them acquisitions. We had Things Remembered and Smart Gift were the two most...

I don't have the history, you don't have the relationships that we're fortunate enough to have so yes that might create some opportunities. We've only done it is hard to even call them acquisitions, we had.

Jim McCann: Bill, Michael also asked about efficiencies and you have an example there in terms of your automation and number of packages we could ship out maybe in particular took about our Ohio distribution facility. Michael, if you recall, we automated our Ohio facility two years ago, but it was late because of supply chain challenges and getting the steel in. So we moved about 125,000 packages on a peak day of this past Christmas out of that facility, versus the year prior, we were in about 80, 80, 85,000 and we did it with less labor.

Things remembered and smart Caf II.

Two most recent.

Speaker 4: Acquisitions are sort of so so we've done but what you see there is LORIS

Acquisitions of sorts that we've done, but what you see there is low risk.

Speaker 4: Dung with cash, acquisitions primarily of intellectual property and capabilities. Small gift we think will become a terrific addition for us. It helps individuals but mostly businesses, planning their gifting and access to our portfolio products. So that's just a few people, very talented engineers that came with that and a company we've been working with for a few years on a contract basis. So we knew it well. The second one was things.

Done with cash.

Acquisitions, primarily of intellectual property and capabilities small cap, we think will become a terrific addition for us it helps individuals but mostly businesses.

<unk> gifting and access to our portfolio of products.

That's just a few people very talented engineers that came with that and our company. We've been working with for a few years on a contract basis. So we knew it well the second one was things remembered and there again, we've got the intellectual property the Urls.

Speaker 4: And there again, we got the intellectual property, the URLs, and the two million person customer list that came with that. We put that on top of our platform of personalization capabilities, which is really, really state of the art and really well done. And we have three different doors into that capability now. We have personalization wall, which was an acquisition.

Jim McCann: And we did it first, so 100 would used to be the peak before that would be one day, and I think this year we did six days in a row of over 100,000 packages. And we did that bill, we said a third less labor. Not quite that, but we certainly did it with less labor. And now what we implemented last year, so this upcoming year will be the third year of that facility.

And the 2 million person customer list that came with that we put that on top of our platform, our personalization capabilities, which is really.

Really state of the art and really well done and we have three different doors into that capability now we have personalization mall, which was an acquisition we have personalization universe, which was <unk>.

Jim McCann: So we'll get more efficiency out of that facility. It'll be the second year of our land of facility that came on late the automation, you know, last year in November, again, because of supply chain challenges. So we'll have that as the second year. And we also put some automation efforts into our medical facility, which went live last year as well. We'll get the second year of that. So our efficiency will continue to improve in fiscal 24 because just having more experience and having it kind of laid in for a full year or two new facilities.

Speaker 4: We have a personalization universe which was a Denoubo startup that we did ourselves. And now the addition of things remembered. Which we're particularly excited about. We just did a brand review of how to make Chicago.

<unk> startup that we did ourselves and now with the addition of things remembered which we're particularly excited about we just did our brand review.

Cargo with the team at personalization Universe personalization mall with things remembered team and we can really grow that business nicely and there is a perfect example, Michael where we see the range of price points. The quality of the products that we can bring to consumer under the things remembered brand with its history.

Speaker 4: at personalization, universalization wall with the things we mentioned.

Speaker 4: And we can really grow that business nicely. And there's a perfect example, Michael, of where we see the range of price points, the quality of the products that we can bring to a consumer under the Things Remembered brand with its history. I was shocked to learn that one time they had 1,400 stores.

Jim McCann: And Michael, Tom, just add on just I think we have questions partially going is, you know, what are we seeing going forward for the holiday season in a ramp and right now. We're seeing a pretty good environment. We think we'll be fine in getting the folks we need and talking to our partners. And, you know, also while we don't expect rates to diminish, we don't expect them to rise either. So we think we're in good shape here for at least where we stand today.

I was shocked to learn at one time.

1400 stores.

Speaker 4: which was striking to me. So what we did was we picked up IP that we could sit on top of infrastructure that we already have and grow it out in a very deliberate fashion, appealing to a broader range of customers, especially in that wedding and new baby space, and of course holiday.

Which was.

Striking debate. So what we did was we picked up IP that we could sit on top of infrastructure that we already have and grow it out in a very deliberate fashion appealing to a broader range of customers, especially in the wedding and baby space.

This holiday as well.

Speaker 7: Terrific. Thanks for taking my questions. Thank you, and just mic.

Terrific. Thanks for taking my questions. Thanks for your interest Michael.

Jim McCann: So when we talk about a reversion to the mean, we have no illusion, Michael, about the fact that labor rates aren't going to return to pre-pandemic levels. Those are permanent. So we're very glad we made the investment over the last three now four years on the automation side of things where that brings a benefit of needing less people and being more productive.

Speaker 6: The next question comes from Alex Furman with Greg Hallam. Please go ahead.

The next question comes from Alex Fuhrman with Craig Hallum.

Please go ahead.

Speaker 10: Hey guys, thanks very much for taking my question and first of all, I just want to say, Chris, it's been such a pleasure getting to know you over the years and really hope you are back at 1-800-Flowers soon. I wanted to ask you guys about, revenue growth obviously has been

Hey, guys. Thanks, very much for taking my question and first of all I just want to say.

Such a pleasure getting to know you over over the years and really I really hope you are back.

Back at one 800 flowers soon.

Jim McCann: Thanks for that color. Is there a way to determine how much of the revenue impact it was due maybe to a shift in lower price products? But we didn't see much of a shift to lower price products as Tom pointed out in his comments. We actually had an increase our average order size. So we think that the lower end of the funnel shopper just wasn't there on those everyday occasions like they might have been during the pandemic.

Wanted to ask you guys about revenue growth, obviously has been challenging here.

Speaker 10: challenging here. What gives you confidence that, you know, it is a matter of when and not if you get to revenue growth? You know, are there any kind of new...

What gives you confidence that it is a matter of.

When they're not yet you get to revenue growth.

Are there any kind of new.

Speaker 10: you know, kind of product launches or marketing campaigns. I know you mentioned, you know, a big uptick in kind of multi branded gifting, but would love to just get a sense of, you know, where that confidence comes from that revenue growth will resume at some point in the future. Well, we didn't mean to sound confident.

You know kind of product launches marketing campaigns, I know you've mentioned a big uptick in kind of a multi branded gifting, but would love to just get a sense of where that confidence comes from that revenue growth will resume at some point in the future.

Jim McCann: So it wasn't the result of selling lower price items. In fact, Tom mentioned in his comments too that we both want to increase our average ticket in terms of the range of products that we offer. So we have plans to introduce some more lower price items. At the same time, we're beginning to think that we have the opportunity to increase some higher price items too. So you'll see our range expand. The lower end of the income scale is where we saw discretionary income suffer and we saw some of those lower price point products drop out.

Well, we didn't mean to sound positive.

Speaker 4: Just kidding. The things that we point to internally are the challenges been in the everyday business. And I'll ask Tom to give you some more color on that. The everyday business where it's purely discretion.

Yeah.

Just kidding.

The things that we point to internally.

The challenge has been in the everyday business and I'll ask Tom to give you some more color on that.

The everyday business, where it's purely discretionary we think than we've seen historically.

Speaker 4: We think and we've seen historically that when it comes to the important milestone holidays, like Thanksgiving and Christmas, at the end of this second fiscal quarter for us, it's not really discretionary, there's a discretionary element, but people you want to buy gifts for are going to be there all the time. With a range of products we have, with the behavior of our passport customer, which has become a very big and important part of our next.

When it comes to the important milestone holidays Thanksgiving Christmas.

At the end of this second fiscal quarter for us, it's not really discretionary visit.

There's a discretionary element, but people you want to buy gifts were going to be there all the time with a range of products, we have with the behavior of our passport customer, which has become a very big and important part of our mix.

Michael Kupinski: Thank you. And finally, thanks Bill.

Michael Kupinski: And finally, the company has been successful in making acquisitions during periods of economic uncertainty and some of your your benefits acquisitions. I think we're during those periods. It was wondering it in this environment. Are there acquisitions in the pipeline? Can you just talk about the acquisition and environment?

Speaker 4: and historical patterns that we can go back to. So I think what as Bill mentioned in his summary there.

And historical patterns that we can go back to so I think as Bill mentioned.

In his summary, there if you look back pre pandemic we had.

Speaker 4: If you look back pre-pandemic, we had 10 years of a CAGR compounded growth rate, obviously, of 12%.

10 years ago.

Jim McCann: Michael Jim again on the M&A side of things. Yes, you have seen us in the past when times get tougher, more opportunities present themselves. That's why we're pleased and a little lucky that Bill and team showed the financing with our long term banking relationships because we're told that we did our deal at the very end of June. And we're told that even the syndication market is having some tightness in it now, quite a bit of tightness in it now, which doesn't vote well for companies that are profitable, don't have the history, don't have relationships that we're fortunate enough to have.

<unk>, the compounded growth rate, obviously of 12%.

Speaker 4: We got a combination of organic growth and some of the small acquisition tuck-ins.

We that was a combination of organic growth in some of the small acquisition tuck ins that we've done.

Speaker 4: As we look back over that time, we also had a 42% growth margin during that same period. We'll give it take 50 basis points each year without it being a straight linear rise. So those are the two metrics we're looking to get back to. But from the sales point of view, that'll be an important ingredient. Tom, a bunch of touch on where you think we've anchored our forecast with future wise.

As we look back over that time, we also had a 42%.

Gross margin during that same period give or take 50 basis points year to year with without it being a straight linear rise. So those are the two metrics, we're looking to get back to.

But from a sales point of view that will be an important ingredient Tom bunch of touch on where you.

Thanks.

We think that our forecast for the future why are why we have that confidence.

Speaker 8: So first, I mean, as we look into this...

So first I mean as we were.

Jim McCann: So yes, that might create some opportunities. We've only done. It's hard to even call them acquisitions. We had things remembered and smart gift with the two most recent acquisitions of sorts. So we've done. But what you see there is low risk. Done with cash. Acquisitions primarily of intellectual property and capabilities. Small gift, we think will become a terrific addition for us. It helps individuals, but mostly businesses plan their gifting and access to our portfolio products.

We look into.

Speaker 8: 2024 year, we are expecting

2024 year, we are expecting.

Speaker 1: our sales to begin to rebound during the holiday period as we have seen better results during the holiday period than the everyday periods as Jim

Our sales to begin to rebound during the holiday period as we would have seen better results during the holiday period, and then the everyday periods as Jim mentioned.

Speaker 8: You know, we believe the user experience investments we've made, the increasing visibility of our family of brands, our extended array of products that Jim had mentioned earlier, you know, that includes a marketplace product and organic products we continue to build beyond the acquisition.

We believe.

The user experience investments, we've made the increasing visibility of our family of brands.

Our extended array of products that Jim had mentioned earlier that includes our marketplace products and organic products, we continue to build beyond the acquisitions.

Jim McCann: So that's just a few people very talented engineers that came with that and a company we've been working with for a few years on a contract basis. So we knew it well. The second one was things remembered. And there again, we got the intellectual property, the URLs and the two million person customer lists that came with that. We put that on top of our platform of personalization capabilities, which is really, really state-of-the-art and really well done.

Speaker 8: And what we're seeing is a deeper relationship with our existing customers.

And what we're seeing is a deeper relationship with our existing customers and we're seeing.

Speaker 1: You know, good results and focus there and we think we have a lot more opportunity.

Good results.

And focus there and we think we have a lot lot more or opportunity.

Speaker 8: As well as Bill mentioned that in the second half of the year we do have plans that will be

As well as Bill mentioned that in the second half of the year, we will we.

We do have plans.

That will be.

Speaker 1: Using our marketing expense in order to drive more demand, again, as appropriate and prove it in the management.

Increasing our marketing expense in order to drive more demand again as appropriate and prudent in the management.

Jim McCann: And we have three different doors into that capability now. We have personalization wall, which was an acquisition. We have Personalization Universe which was a dinner of our start-up that we did ourselves and now with the addition of things remembered, which we're particularly excited about. We just did a brand review of Chicago with the team at Personalization, Universalization Mall with the things remembered team and we can really grow that business nicely. And there's a perfect example, Michael, where we see the range of price points, the quality of the products that we can bring to our consumer under the things remembered brand with its history.

Speaker 8: You know, we've all been here for many years. We've seen pullbacks in the economy, et cetera. And we think history is a great guide for us so that gives us confidence that...

We've all been here for for many years, we've seen up pullbacks in the economy et cetera, and we think history is a great guide for us with that gives us confidence that.

Speaker 1: You know, we can't predict when exactly the consumer's going to return, but we do see a lot of indications in other means where the consumer's habits have returned, you know, from pre-pandemic levels. And so, you know, that along with many other factors gives confidence that the consumer will return. Thank you.

We can't we can't predict when exactly the consumers going to return, but we do see.

A lot of indications and other means where.

The consumers' habits have returned.

From pre pandemic levels.

No.

That along with many other factors gives us confidence that the consumer will return.

Okay. That's really helpful. Thank you guys very much.

Jim McCann: I was shocked to learn at one time that 1,400 stores at their peak, which was striking to me. So what we did was we picked up IP that we could sit on top of infrastructure that we already have and grow it out in a very deliberate fashion, appealing to a broader range of customers, especially in that wedding and due baby space and of course holidays as well.

Thank you Alex.

Speaker 6: The next question comes from Anthony Levitsinsky with Sedonian Company. Please go ahead.

The next question comes from Anthony <unk> with Sidoti <unk> Company. Please go ahead.

Michael Kupinski: Terrific. Thanks for taking my questions. Thanks for your interest, Michael.

Good morning, Thank you for taking the questions and welcome back Jim and best wishes to Chris for a speedy recovery.

Speaker 11: Good morning, and thank you for taking the questions. And welcome back, Jim, and best wishes to Chris for a speedy recovery. Thank you.

Thank you Anthony.

So yes, so I guess I was just just a follow up on the previous question.

Speaker 11: So yeah, so I guess you know, just just the follow up on the previous question, you know, as far as

As far as.

Speaker 11: The everyday gifting business obviously has been challenged. As far as, you know, main demand levers that you're looking to put in place, to get that business to do better. I know you mentioned, you know, some multi-branded bundles. I mean,

The everyday gifting business, obviously has been challenged as far as you know.

Alex Furman: The next question comes from Alex Furman with Greg Halem. Please go ahead. Hey guys, thanks very much for taking my question.

Main demand levers that you're looking to.

Put in place to get that business to be in.

Jim McCann: And first of all, I just want to say, Chris has been such a pleasure getting to know you over the years and really hope you are back at 1,800 flowers soon. You know, wanted to ask you guys about revenue growth obviously has been challenging here. What gives you confidence that it is a matter of when and not if you get to revenue growth? Are there any kind of new product launches or marketing campaigns?

To do better.

I know you mentioned Nielsen multi branded bundles I mean.

Sure.

Speaker 11: As far as your comment about increasing marketing spending in the back half of the year,

Okay.

As far as your comment about increasing marketing spending in the back half of the year.

Yes.

Speaker 11: Is there maybe perhaps a reason why you're waiting until the back half to do that? Or I know there's a fine line that you're looking to navigate there, but I mean, if you can actually pull off better revenue with better and more spending, why not do it sooner?

Is there maybe perhaps a reason why you're waiting until the back half to do that or.

I know, there's a fine line that youre looking to navigate there, but I mean.

If you can see if you can actually pull off better.

Jim McCann: I know you mentioned, you know, a big uptick in kind of multi-branded gifting, but would love to just get a sense of, you know, where that confidence comes from, that revenue growth will resume at some point in the future. Well, we didn't mean to sound competent, Alex. Just kidding. The things that we point to internally are the challenges been in the everyday business. And I last time to give you some more color on that.

Revenue with better and more spending why not do it sooner.

Speaker 4: I think Bill will comment on that, but as we look at marketing efficiencies, Tom and his team are working on that all the time, we see veins of opportunity. And frankly, during this period, it's let's be prudent, let's keep our powder dry, let's continue to manage our costs as best we can. But the one place that we now have the ability to step on the gas pedal frankly, is in marketing.

I think bill will comment on that but as we look at marketing efficiencies, Tom and his team.

Looking on that over time, we see veins of opportunity and frankly during this period, it's let's be prudent let's keep our powder dry let's continue to manage our cost as best we can but the one place that we now have the ability to step on the gas pedal frankly is in marketing and those plants take some time to build materials.

Jim McCann: The everyday business words, purely discretionary. We think and we've seen historically that when it comes to the important milestone holidays, like Thanksgiving and Christmas, at the end of this second fiscal quarter for us, it's not really discretionary. There's a discretionary element, but people you want to buy gifts for are going to be there all the time. With the range of products we have, with the behavior of our passport customer, which has become a very big and important part of our mix, and historical patterns that we can go back to.

Speaker 4: and those plants take some time to build and then materials. Plus, there are some capabilities we have that we think we can build on top of that will come more fully online as we get closer to the end of this county. So it's a question of timing. When do you fire your gun?

Plus there are some capabilities we have that we think we can build on top of that will come more fully online as we get closer to the <unk> of this calendar year. So it's a question of timing when do you fire. Your guns. When you have the best opportunity and frankly by overspending now as we've seen some competitors in all different.

Speaker 4: when you have the best opportunity. And frankly, by over spending now, as we've seen some competitors in all different categories doing, we see themselves.

<unk> doing we see themselves spending themselves into oblivion and frankly, we were we are quite happy to see them continue to do that.

Speaker 4: spending themselves into oblivion. And frankly, we're quite happy to see them continue.

Jim McCann: So, I think what, as Bill mentioned in his summary here, if you look back pre-pandemic, we had 10 years of a caterer compounded growth rate, obviously, of 12%. We got this a combination of organic growth and some of the small acquisition tokens that we've done. As we look back over that time, we also had a 42% growth margin during that same period. We'll give it take 50 basis points a year to year without it being a straight linear rise.

Speaker 11: Okay, all right, that makes sense, okay. And then, so you want to add something to that? Yeah, I just think the consumers going to tell us a little bit more too, as we get through the holiday period. This is our slow season to begin with. There are a lot of messages in the marketplace that consumers.

Okay, alright that makes sense okay.

Anthony.

So you want to add something to that.

I, just think that the consumer's going to tell us a little bit more too as we get through the holiday period. This is this is a slow season to begin with.

So a lot of messages in the in the marketplace to the consumer is still struggling at this point at this point in time.

We always do better at the holiday and we believe coming off.

Jim McCann: So, those are the two metrics we're looking to get back to. But from the sales point of view, that'll be an important ingredient. Tom Muncher, touch on where you think we've anchored our forecast. Future and why we have that conference. Yeah, so first, I mean, as we looked into this 2024 year, we are expecting our set sales to begin to rebound during the holiday period as we have seen better results during, you know, the holiday periods and then the everyday periods as Jim mentioned, you know, we believe the user experience investments we've made, the increasing visibility of our family brand, our extended array of products that Jim had mentioned earlier, you know, that includes a marketplace products and organic products we continue to build beyond the acquisitions and what we're seeing is the deeper relationship with our existing customers and we're seeing, you know, good results and focus there and we think we have a lot more opportunity.

Speaker 5: that will have this holiday. That will be the time.

The success that we'll have this holiday.

That will be the time for us to invest but we will continue to monitor and operate this business.

Speaker 5: So welcome to the market and operators.

Speaker 5: you know, efficiently, you know, based on what the, you know,

Efficiently based on what the macro trends.

Speaker 8: We are always in market and iterating based upon where we see customer acquisition costs, segments, etc. So if there are veins, as Jim said, we will be taking advantage of those opportunities.

We are always in market.

And Iterating based upon where we see customer acquisition costs segments et cetera. So if there are veins as Jim said.

We will be taking advantage of those opportunities everything I think you've reported on and we've seen ourselves that.

Speaker 4: Anthony, I think you've reported on it. We've seen ourselves that for consumer facing businesses, particularly those who are in e-commerce.

For consumer facing businesses, particularly those who are e-commerce arena, but not just that the.

Speaker 4: but not just. The CAC, the customer acquisition cost has gone through the roof for most companies.

The CAC customer acquisition cost has gone through the roof for most companies.

Speaker 4: So where are bones pulled up, pulling our horns on an advertising case when it is very expensive, or make it more expensive for others?

So we're able to move.

Pull in our horns on an advertising basis, when that is very expensive or make it more expensive for others.

Speaker 4: and rely on our existing customer base, our passport customers, and our ability to stimulate the existing base with offers beyond our primary brand of introduction. So that's why we're able to, you've seen our costs come down so much. So we're sort of continuing that rope-a-drop until the opportunities are better, and that's when people are more in market for gifting occasions at Thanksgiving, or Halloween, Thanksgiving.

And rely on our existing customer base, our passport customers and our ability to stimulate the existing base with what is beyond our primary brand of introduction. So that's why we're able to you're seeing our cost come down. So much. So we're sort of continuing that brokerage up until the opportunities are better and that's when people are more.

Jim McCann: As well as, as Bill mentioned, that in the second half of the year we will, we do have plans that will be, you know, increasing our marketing expense in order to drive more demand, again, as appropriate and prudent in the management. You know, we've all been here for many years, we've seen pullbacks in the economy, et cetera, and, you know, we think history is a great guide for us so that gives us confidence that, you know, we can't predict when exactly the consumers are going to return, but we do see a lot of indications and other means where the consumers' habits have returned, you know, from pre-pandemic levels. And so, you know, that, that along with many other factors gives us confidence that in the consumer will return.

In market for gifting occasions, Thanksgiving Halloween Thanksgiving and Christmas.

Speaker 11: All right, that makes a lot of sense. Yeah. So as far as passport members, are you still seeing them spend two or three times more than non members? Has that trend more or less continued? It has continued, Anthony. We have seen that.

Alright that makes a lot of sense.

So as far as passport members.

Are you still seeing them spend two or three times more than non members has that trend more or less continued.

It has continued Anthony we have seen that.

Stable and in fact, our multi brand customers passport customers we're seeing.

Speaker 1: stable and in fact multi brand customers, past four customers, we're seeing the AOV take up a little bit with those customers too for the year.

The <unk> ticked up a little bit with those customers to for the year.

Gotcha, Okay, and then you also.

Speaker 11: Talked about seeing lower costs for certain commodities. So where have you seen the most relief and where are you seeing the most pressure points?

<unk> talked about seeing lower cost for certain commodities, so where have you seen the most relief and where are you seeing the most pressure points.

Tom Hartnett: Okay, that's, that's really helpful. Thank you guys very much. Thank you, Alex.

Anthony Ludodzinski: The next question comes from Anthony Ludodzinski with Stodian Company. Please go ahead.

Speaker 4: Well, Bill is our expert on commodities. He's spent a lot of time on the farm with the chickens.

Bill is our expert on commodities you spent a lot of time on the phone with the chickens.

Speaker 4: You know, we bake and make a lot of product, Anthony. Cheryl, Harry and David Wolf.

Anthony Ludodzinski: Good morning and thank you for taking the questions and welcome back Jim and the best wishes to Chris for a speedy recovery. Thank you, Anthony. So, yeah, so I guess, you know, just just a follow-up on the previous question, you know, as far as, you know, the everyday gifting business obviously has been challenged. As far as, you know, main demand levers that you're looking to put in place to get that business to be, to do better.

We baked in a lot of product.

Cheryl Harry <unk>, David Wolfe, Womens and where we use lots of eggs and lots of butter and those have been stubborn, but we're starting to see the trends improve there.

Speaker 4: And there we used lots of eggs and lots of butter. And those have been stubborn, but we are starting to see the trends improve there. They tripled in cost within four or five, six months. We had the whole chicken shortage from a flu that went through. Coca-Cola costs for all our chocolates. All of those commodities were high.

Tripled in cost.

Within 456 months, we had the whole bird.

And shortage from a flu that went through.

Coke Coca Cola for all our chocolates all of those commodities were high Bill.

Speaker 4: Did they pick it almost treble and where are we turning?

Did they peaked at almost triple and where are we trending now yes, so exit from all the way back and exit back to their.

Speaker 5: Yeah, so your exit from all the way back and exit back to their

Anthony Ludodzinski: I know you mentioned, you know, some, you know, multi-branded bundles. I mean, as far as your comment about increasing marketing spending in the back half of the year, you know, is there maybe perhaps a reason why you're waiting until the back half to do that or, or, you know, I know there's a fine line that you're looking to navigate there. But I mean, if, if you can, if you can actually pull off, you know, better, you know, revenue with better, more spending, why not do it sooner.

Kind of historic knee mean, as butter and all types of nuts, cashews almonds that we use a lot of the ones that haven't suite.

Speaker 5: as butter and all types of nuts cashews on it.

Speaker 5: a lot of the ones that haven't are wheat, you know, a lot of

Yes.

Speaker 5: some of the macrote and geoblutable issues. Corn continues to be high, sugar and cocoa continues.

Some of the macro and geopolitical issues corn.

<unk> continues to be high sugar and Coco continue to be.

Extremely extremely high.

Speaker 5: So we have a mix of commodities that some have already reverted back to their historical means from a core space. Others are still

So we have a mix of commodities that some have already reverted back to their historical.

It means from a cost basis.

Anthony Ludodzinski: I think Bill will comment on that, but as we look at marketing efficiencies in Tom and his team are working on that all the time, we see veins of opportunity. And frankly, during this period, it's, let's be prudent. Let's keep our powder dry. Let's continue to manage our costs as best we can. But the one place that we now have the ability to step on the gas pedal, frankly, is in marketing.

Others are still at very high levels on the other side of the cost kicking ahead, we got last year, we pointed out the team, Chris and Bill and Tom pointed out that Ocean freight was the the real shocker.

Speaker 4: On the other side of the course kicking ahead, we got last year. We pointed out the team Chris and Bill and Tom pointed out that Ocean Freight was the real shocker.

Speaker 4: Now we use ocean freight, both in blue net and in our food brands particularly, which bring in packing materials, contain shipping materials, non-perishable stuff. And I built what would our increased unbudgeted costs they had last year were...

We use ocean freight bulk with bloom that ended our food brands, particularly with bringing in packing materials containers shipping materials nonperishable stuff and.

Anthony Ludodzinski: And those plans take some time to build and materials, plus there are some capabilities we have that we think we can build on top of that will come more fully online as we get closer to the end of this calendar year. So it's, it's a question of timing. When do you fire your guns when you have the best opportunity? And frankly, by overspending now as we've seen some competitors in all different categories doing, we see themselves spending themselves into oblivion.

Bill what with our our increased on budgeting cost last year were $6 million or.

Speaker 5: So we historically spent around $10 million dollars pre-rise and that raised up its peak to about $50 million.

So we've historically spent around $10 million.

<unk> wise in that group that raised Opex peak to about $50 million.

Slipped back down to those to those let those historical levels now.

Speaker 4: That's what we told you, Anthony, that we don't think labor will revert. We think the inflation of labor is stalling, but we certainly aren't going to go backwards in our labor rate, which is a good thing for people and good thing that we've been able to adjust. But Ocean Freight has now come back to just very close.

That's fine.

We told you Anthony that we don't think labor will reverse we think the inflation of labor is stalling, but we don't think we certainly arent going to go backwards on a labor rate, which is a good thing for people and good thing that we've been able to adjust but ocean freight.

Anthony Ludodzinski: And frankly, we're, we're quite happy to see them continue. I just think the consumers are going to tell us a little bit more, too, as we get through the holiday period. This is our slow season to begin with. A lot of messages in the marketplace, the consumer is still struggling at this point in time. We always do better at the holiday and we believe coming off the successful will have this holiday, that will be the time for us to invest.

Now come back to just very close to pre pandemic levels. So we went from a high of a container was something in the $25000 range back down to 5000, maybe the low with pre pandemic was four so we're very close to pre pandemic levels, there, but on the labor side were not expecting.

Speaker 4: to pre-pandemic levels. So we went from a high of a container or something in a $25,000 range back down to 5,000. Maybe the low with pre-pandemic was four. So we're very close to pre-pandemic levels there. But on the labor side, we're not expecting, we're not expecting huge inflation there, but we're not expecting it to come down either. So that's why automation, being able to fill the jobs and not incurring big overtime costs as we prep for the holiday to burden us.

We're not expecting huge inflation, there, but we're not expecting it to come down either so that's why automation being able to fill the jobs and not incurring big overtime cost as we prep for the holiday to burden.

Anthony Ludodzinski: But we'll continue to monitor and operate this business efficiently based on what the macro trends are. We are always in market and iterating based upon where we see customer acquisition costs, segments, etc. So if there are veins, as Jim said, we will be taking advantage of those opportunities. Anthony, I think you've reported on it. We've seen ourselves that for consumer facing businesses, particularly those who are in e-commerce arena, but not just the customer acquisition cost has gone through the roof for most companies.

Any this year.

Speaker 11: Understood. And my last question, I guess, for Bill, what's the capex outlook for fiscal 24?

Understood and my last question I guess for Bill.

What's the Capex outlook for fiscal 'twenty four.

Yes, we think capex will be added below last year's level. So if you remember because a lot of the automation efforts and some of the technology spend.

Speaker 5: at or below last year's level. So if you remember because of a lot of the automation.

Speaker 5: technology spend fiscal 21 and 22, we had elevated capex of 55 and 65 million respectively this past year brought it back down to about 45 million and for fiscal 24 we expect to be in that 40 million.

'twenty, one and 'twenty, two we had elevated capex of $55 million to $65 million, respectively. This past year brought it back down to about $45 million and for fiscal 'twenty four we expect to be in that $40 million range, but.

Anthony Ludodzinski: So we're able to pull in our horns on advertising cases when it is very expensive, or make it more expensive for others, and rely on our existing customer base, our passport customers, and our ability to stimulate the existing base with authors beyond our primary brand of introduction. So that's why we're able to, you've seen our costs come down so much. So we're sort of continuing that roped up until the opportunities are better, and that's when people are more in market for gifting occasions that Thanksgiving, Halloween Thanksgiving Christmas.

Speaker 4: But it was good prudent spending obviously because you kept action on automation really helped the throughput and helped us on where a label was really challenged.

It was good prudent spending obviously because.

Capex on automation really helped the throughput and helped us with our label was really challenged.

Okay, well, thank you very much and best of luck. Thank you Anthony.

Speaker 6: This concludes our question and answer session. I would like to turn the conference back over to Jim McCann for any closing remarks.

This concludes our question and answer session I would like to turn the conference back over to Jim Mccann for any closing remarks.

Speaker 4: Thank you and thank you for your interest and your time today. I appreciate all the good questions. We're getting ready for a holiday weekend, the end of summer. So I hope it's a good and fun one for you and your families. If you have any other questions, please don't hesitate to reach out to us. And Bill and Andy and Tom are available to handle any question chat. So we look forward to addressing those in the days ahead and certainly after the holiday weekend. So, best of the weekend.

Thank you and thank you for your interest in <unk>.

Today I appreciate all the good questions.

Anthony Ludodzinski: Alright, that makes a lot of sense, yeah. So as far as passport members, are you still seeing them spend two or three times more than nonmembers? Has that trend more or less continued? It has continued. Anthony, we have seen that stable, and in fact multi brand customers, passport customers, we're seeing the AOV take up a little bit with those customers too for the year. Gotcha, okay.

Getting ready for a holiday weekend at the end of summer. So I hope, it's a good and fair.

One for you and your families. If you have any other questions. Please don't hesitate to reach out to us.

Bill and Andy and Tom are available to handle any of your question. Josh. So we look forward to addressing those and the days ahead and certainly after.

After the holiday weekend, so rest of the weekend to you.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker 6: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Jim McCann: And then you also talked about seeing lower costs for certain commodities. So where have you seen the most relief and where are you seeing the most pressure points? Well, Bill is our expert on commodities. He's spent a lot of time on the farm with the chickens. You know, we bake and make a lot of product. Anthony, Cheryl's, Harry and David, Wolfamins, and there we use lots of eggs and lots of butter.

Yeah.

[music].

Speaker 2: It.

Jim McCann: And those have been stubborn, but we are starting to see the trends improve there. They tripled in cost within four or five, six months. We had that whole chicken shortage from a flu that went through the Coca-Cola for all our chocolates, all of those commodities were high. Bill, did they peak in almost triple and where are we trending now? Yeah, so your eggs are all the way back and eggs are back to their kind of historic.

Jim McCann: Hartnett mean as butter and all types of nuts, cashews, almonds that we've used a lot of. The ones that haven't are wheat, some of the macro and geo-political issues. Corn continues to be high, sugar and cocoa continue to be extremely high. So we have a mix of commodities that some have already reverted back to their historical means from a course basis. Others are still at very high levels. On the other side of the course kicking ahead we got last year, we pointed out the team Chris and Bill and Tom pointed out that ocean freight was the real chakra.

Jim McCann: Now we use ocean freight, both in balloon net and in our food brands, particularly, would bring in packing materials, container shipping materials, non-perishable stuff. And Bill, what was our increased unbudgeted costs the last year were $10 million? So we historically spent around $10 million, pre-wise and that raised up at speed to about 50 million. Let's walk back down to those historical levels now. That's what we told you, Anthony, that we don't think labor will revert.

Jim McCann: We think the inflation of labor is stalling, but we certainly aren't going to go backwards in our labor rate, which is a good thing for people and a good thing that we've been able to adjust. But ocean freight has now come back just very close to pre-pandemic levels. So we went from a higher container or something in a $25,000 range, back down to $5,000, maybe to low with pre-pandemic was four. So we're very close to pre-pandemic levels there, but on the labor side we're not expecting, we're not expecting huge inflation there, but we're not expecting it to come down either. So that's why automation being able to fill the jobs and not incurring big overtime costs as we prep for the holiday to burden us any issue here.

Bill Shea: Understood.

Bill Shea: And my last question, I guess, for Bill, what's the cat-backs outlook for fiscal 24? Yeah, we think cat-backs will be at or will low last year's level. So if you remember because a lot of the automation efforts and some of the technology spend fiscal 21 and 22, we had elevated cat-backs of 55 from 65 million respectively this past year, brought it back down to about 45 million, and for fiscal 24 we expect to be in that $40 million range. But it was good prudent spending obviously because cat-backs on automation really helped the throughput and helped us where a label was really challenged.

Anthony Ludodzinski: Okay, well, thank you very much and best of luck. Thank you, Anthony.

Jim McCann: This concludes our question and answer session.

Jim McCann: I would like to turn the conference back over to Jim McCann for any closing remarks. Thank you. And thank you for your interest and your time today. Appreciate all the good questions. We're getting ready for a holiday weekend in this summer. So I hope it's good and a fun one for you and your families. If you have any other questions, please don't hesitate to reach out to us and Bill and Andy and Tom are available to handle any question chat so we look forward to addressing those in the days ahead and certainly after the holiday weekend. So best of the weekend.

Operator: The conference has now concluded. Thank you for attending today's presentation.

Operator: You may now disconnect.